IRA Contribution Deadline Approaching
It’s not too late to contribute to an Individual Retirement Arrangement (IRA) and claim it on a 2018 tax return, the Internal Revenue Service reminds taxpayers. Contributions made to traditional IRAs by April 15, 2019, may be eligible for a tax credit or deduction on their 2018 tax return.
Readers can refer to a series called the, a resource to help taxpayers file an accurate tax return. Additional help is available in , your Federal Income Tax and the .
Anis designed to enable employees and the self-employed to save for retirement. Most taxpayers who work are eligible to start a traditional or Roth IRA or add money to an existing account.
Contributions to aIRA are usually tax deductible, and distributions are generally taxable.To count for a 2018 tax return, contributions must be made by April 15, 2019, (April 17, 2019, for residents of Maine and Massachusetts). Taxpayers can file their return claiming a traditional IRA contribution before the contribution is actually made. The contribution must then be made by the April due date of the return. While contributions to a are not tax deductible, qualified distributions are tax-free. In addition, low- and moderate-income taxpayers making these contributions may also qualify for the Saver’s Credit.
Generally, eligible taxpayers canup to $5,500 to an IRA for 2018. For someone who was 50 years of age or older at the end of 2018, the limit is increased to $6,500.
Qualified contributions to one or more traditional IRAs are deductible up to the contribution limit or 100 percent of the taxpayer’s compensation, whichever is less.
For 2018, if a taxpayer is covered by a workplace retirement plan, theto a traditional IRA is generally reduced depending on the taxpayer’s
Single or head-of-household filers with income of $63,000 or less can take a full deduction up to the amount of their contribution limit. For incomes more than $63,000 but less than $73,000, there is a partial deduction and for $73,000 or more, there is no deduction.
Filers that are married filing jointly or a qualifying widow(er) with $101,000 or less of income are allowed a full deduction up to the amount of the contribution limit is permitted. Filers with more than $101,000 but less than $121,000 can claim a partial deduction and if their income is at least $121,000, no deduction is available.
For joint filers, where the spouse making the IRA contribution is not covered by a workplace plan, but their spouse is covered, a full deduction is available if their modified AGI is $189,000 or less. There’s a partial deduction if their income is between $189,000 and $199,000 and no deduction if their income is $199,000 or more.
Filers who are married filing separately and have an income of less than $10,000 can claim a partial deduction. If their income is at least $10,000, there is no deduction.
Worksheets are available in theor in . The deduction is claimed on , . Nondeductible contributions to a traditional IRA are reported on .
Even thoughare not tax deductible, the maximum permitted amount of these contributions begins to phase out for taxpayers whose modified adjusted gross income is above a certain level.
- For filers who are married filing jointly or qualifying widow(er), that level is $189,000.
- For those who file as single, head of household, or married filing separately and did not live with their spouse at any time during the year, that level is $120,000.
- For filers who are married filing separately and lived with their spouse at any time during the year, any amount of modified AGI reduces their contribution limit.
The, also known as the Retirement Savings Contributions Credit, is often available to IRA contributors whose adjusted gross income falls below certain levels. In addition, beginning in 2018, designated beneficiaries may be eligible for a credit for contributions to their Achieving a Better Life Experience ( ) account. For 2018, the income limits are:
- $31,500; single and married filing separate
- $47,500; head of household
- $63,000; married filing jointly
Taxpayers should useto claim the Saver’s Credit, and its instructions have details on figuring the credit correctly.
Taxpayers can find answers to questions, forms and instructions and easy-to-use tools online at. They can use these resources to get help when it’s needed, at home, at work or on the go.
- , Tax Reform Basics for Individuals and Families